Feed-in tariffs for British nuclear power rile German politicians and renewables industry

Resistance to Germany’s subsidies for the renewables industry have left politicians questioning why financing for the UK’s Hinkley Point nuclear power station has been granted EU approval.

The EU’s decision to give Britain the go-ahead to fund its first new nuclear facility in 20 years through feed-in tariffs met with little enthusiasm from German officials and the renewables industry, with Environment Minister Barbara Hendricks (Social Democrats, SPD) calling the decision “utterly wrong.”

Wolfgang Tiefensee, Bundestag spokesperson on economy and energy for the Social Democrats (SPD), told the Clean Energy Wire that London’s plans to fund nuclear power with public money were “as if Fukushima had never happened, as if the fairy-tale of affordable nuclear power had not been taken ad absurdum, and as if the unsolved problem of nuclear waste didn’t exist.”

The Hinkley Point power station in Somerset, southwest England, will be financed by a feed-in tariff of 92.50 GBP per megawatt-hour (MWh) paid to the plant’s operator, French utility EDF, and guaranteed by the UK government for 35 years. The project came under scrutiny from EU officials but has now been officially approved – raising eyebrows in Germany, which faced resistance to its own feed-in tariffs for renewable energy.

Germany’s energy transition – the plan to simultaneously phase out nuclear power and to cut carbon emissions through a push into renewable energy – has been met with scepticism abroad over the cost of renewables and the fact that carbon emissions have stopped falling in recent years as the country burns more coal.

The European Commission had questions over whether Germany’s billion-euro support system for renewables involved excessive state aid and launched an inquiry into the German Renewable Energy Act (Erneuerbare Energien Gesetz, EEG), eventually forcing amendments to the EEG and causing bad blood between the Ministry for Energy and Economy in Berlin and outgoing competition commissioner Joaquín Almunia, earlier this year.

Almunia looked specifically at provisions in the EEG that exempt energy-intensive industries from paying the otherwise mandatory EEG-surcharge, levied to cover the feed-in tariff to finance the development of renewables in Germany. But he also criticised the principal of feed-in tariffs guaranteed to producers of renewable electricity (See Factsheet: Defining features of the German EEG).

In December last year, Almunia opened an in-depth investigation into the Hinkley Point nuclear project to assess whether the planned 17 billion GBP in subsidies would contravene European state aid rules, and questioned whether the “construction of a nuclear power station could not be achieved by market forces alone”.

But Almunia eventually managed to push through Hinkley Point’s case on the 8 October despite initial opposition from at least five other commissioners and the disapproval of green campaigners in Brussels.

Falk calculates that “[p]ayments to the operators of Hinkley Point for its entire runtime will amount to around 300 per cent of the money paid to wind and solar power producers prescribed by the EEG”.

At 12 cents per kilowatt-hour (KWh) the payment is around twice the current wholesale price for power in Europe and exceeds the tariff paid for onshore wind power in Germany of 8.9 cents per kilowatt-hour under the EEG. But under the EU’s rules on “public support for environmental protection and energy” adopted by the Commission in April 2014, feed-in tariffs for renewable energy should be gradually replaced with competitive bidding for public support in order to “expose renewable energy sources to market signals”.

Critics argue that the same is not being demanded of Hinkley Point.

“Nuclear power is not competitive anymore, electricity from onshore wind turbines is already less expensive than nuclear energy and in 2020 when the new reactor will go online, other technologies will be even more opportune,” Rebecca Harms, chair of the Group of Greens in the European Parliament told the Clean Energy Wire.

The Commission approved financing of the construction with what commissioner Almunia called “significant” revisions ­­– including a so called “gain-share mechanism” to ensure the operator’s profits are of benefit to the public, should they exceed the estimated rate – but other commentators have said the amendments were “minimal”.

Harms fears Hinkley Point could set a precedent for future nuclear reactors in Europe. “It is only a matter of time before other EU member states introduce similar financing options,” she said.

In Germany, which has chosen a path of strict abstinence with regards to nuclear power (See Factsheet History behind Germany’s nuclear phase-out) the Ministry for Energy and Economic Affairs, the BEE and Wolfgang Tiefensee, have all raised the possibility of the European Court of Justice investigating the Commission’s decision.

Other German politicians have resolved to accept the ruling.

“Decisions about the energy mix are part of national sovereignty,” Joachim Pfeiffer, Tiefensee’s CDU counterpart in the Bundestag told the Clean Energy Wire. “But it has to be clear that national support for certain energy sources must not lead to a fragmentation of the EU’s internal market.”

Pfeiffer added that the Commission has checked the Hinkley Point project’s compliance with state aid rules and said, “we will accept this ruling.”

Both Pfeiffer and Tiefensee stressed the need for a comprehensive agreement on European energy policy on subsidies, the development of renewable energies, the electricity market and energy security.